Model Question of Finance
Subject: Finance | F.M.: 100
P.M.: 35 | Time: 3 hrs
Candidates are required to give their own words as far as practicable. The figures in the margin indicate full marks.
All questions are compulsory.
- Define finance. State its relationship with Economics. [2+3=5]
- Write the meaning of financial intermediary. Briefly write the types of financial intermediaries present in Nepal. [2+3=5]
- Write about the role of financial institution in Financial Market. [5]
- What is a Commercial Bank? What are its major functions? [4+6=10]
- Write short notes on: [2.5+2.5=5]
a. Treasury bills
b. Bills of exchange
6. The balance sheet of a company as on 31st December, 2016 is given below. [3+2=5]
Find Out
a. The book value of Company.
b. The book value per share.
7. a. A Treasury bond that matures in 10 years has a yield of 6 percent. A 10 year corporate bond has a yield of 8 percent. Assume that the liquidity premium on the corporate bond is 0.5 percent. What is the default risk premium on the corporate bond? [Ans: 1.5%] [5]
b. The real risk-free rate is 3 percent and inflation is expected to be 3 percent for the next years. A 2-year treasury security yields 6.2 percent. What is the maturity risk premium for the 2-year security? [5]
8. a. Find out the percent value of Rs. 5,550 due in 3 years at a discount rate of 6 percent. [2.5]
b. Find out the future value of an initial Rs. 10,000 compounded for 2 years at 8 percent. [2.5]
c. You approach Nepal Bank Limited for a term loan of Rs. 500,000. The bank agrees to give the loan to be fully amortized in a period of 5 years at 10 percent, annual payment. Calculate the size of each installment. [5]
9. Following are the cash flow streams of investment proposals X and Y.
a. What is the percent value of cash flow stream from proposal X if the discount rate is 8 percent? [8]
b. What is the future value of cash flow stream from proposal Y if appropriate compound rate is 9 percent? [5+5]
10. What is meant by risk? Write about the important of Pure Risk? [3+4]
11. Write the meaning of insurance. What are its principles? [3+5]
12. What are the essential elements of Life Insurance Contract? [5]
13. Ms. Sangeeta is willing to pay one year life policy of Rs. 3,00,000 from Rastriya Beema Sansthan. She is now 30 years old. Assume the probability that a person’s age 30 years will die during the year is 0.6 percent and cost of money is 8%. What is the fair amount of premium Ms. Sangeeta must pay for this policy? [5]
14. Discuss the important types of Non-life insurance and state their contribution in business. [10]
Note: All these questions are copied here from the third party management students are requested to take this information at their own way.